To prevent fraud and theft, transaction cards such as credit cards, debit cards, and stored value cards may be issued in an inactive state, where the card must be activated prior to use. A separate activation step can serve at least two important goals. First, it can ensure that the card is in the possession of the rightful cardholder. For instance, cards may be activated when the rightful cardholder verifies receipt, such as by accessing a central processor (e.g., via phone) and providing personal identification information. Second, activation can ensure that the card has been validly purchased for legitimate value (and not stolen). For instance, a prepaid card may be activated at the time it is purchased for valid funds, e.g., by scanning a barcode on a package that contains the card at a point of sale and receiving payment for the card.
After activation, transaction cards may be used to purchase goods and services from merchants. Most transaction cards such as credit cards, debit cards, and stored value cards have a single magnetic stripe that stores magnetically encoded data associated with an account. The magnetic stripe is swiped at merchant terminals in transactions where cardholders access value or credit in the account to purchase goods and services. Typically the magnetic stripe is encoded with data that enables transactions where card account funds are accessed over a communications network such as a credit or debit network. For instance, the encoded data may comprise a bank identification number (BIN) and an account identifier, such as the card number. While the data encoded on the magnetic stripe enables transactions, it typically is not configured to enable card activation at merchants outside the issuing merchant locations. Thus, activation is typically accomplished using means other than the card's single magnetic stripe. As noted above, a card may be activated over the phone or by scanning the barcode of a package containing the card.
Other cards may be activated by swiping the card's magnetic stripe. However, for these cards, the magnetic stripe encoding is required to be the same for activation and regular use of the card. This is typically not an issue when a single merchant's system handles both the activation and the regular use of the card. However, problems may arise when two different systems are involved, because the different systems must coordinate the activation of the card before enabling its regular use.
The magnetic stripe is encoded only for activation purposes, and the regular functioning of the card does not require a magnetic stripe. For instance, phone cards may display a PIN used for wireless phone calls that is activated by swiping a magnetic stripe on the card; thereafter, the magnetic stripe is not needed to access the value of the PIN.
Another type of transaction card has two or more magnetic stripes on a single, standard-size transaction card. The two or more magnetic stripes may be used to access two different transaction accounts. In this way, a cardholder may carry a single transaction card instead of two different credit cards or other transaction cards.